CBO: Bush Budget Plan Barely Helps Economy
Mon Mar 8, 7:12 PM ET
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WASHINGTON (Reuters) - The tax cuts and spending controls proposed
in President Bush (news - web sites)'s 2005 budget would have little
impact on the U.S. economy's performance, Congressional analysts said
on Monday.
In February, Bush proposed a $2.4 trillion budget plan that slashed
funds for 128 programs but sought to make his tax cuts permanent.
The nonpartisan Congressional Budget Office (news - web sites) said
economic output under Bush's plan could be either "higher or lower"
than if Bush's proposals were not in place.
"However, the differences are likely to be small, affecting output
by less than one-half of one percentage point, on average," the study
said.
The economy grew 4.1 percent in the fourth quarter of last year, a
sharp slowdown from the 20-year high of 8.2 percent in the previous
three months of the year.
The CBO is forecasting economic growth of 5.9 percent in 2004
followed by a rise of 5.4 percent in 2005.
The economy is set to be a key issue in the debate between Bush and
Democratic White House candidate John Kerry (news - web sites) in the
run-up to the Nov. 2 presidential election.
Kerry has repeatedly criticized Bush for presiding over the weakest
period of job creation for any president since Herbert Hoover during
the Great Depression. Since Bush took office in January 2001, 2.2
million jobs have vanished.
Bush argues his tax cuts have helped pull the economy out of a
recession, a slump his economic team says he inherited from
predecessor Bill Clinton (news - web sites).
"The report says even with spending restraint and tax cuts the
economy won't grow enough to make the deficits go away," said CBO
Director Douglas Holtz-Eakin.
He added that neither the spending controls nor the tax cuts were
large enough to make a difference.
The report, an analysis of the White House budget proposal, comes as
the Senate begins debating its own budget blueprint that seeks to
scale back billions of dollars in spending Bush proposed and also
includes a smaller package of tax breaks.
The CBO released the numbers in the analysis at the end of February.
The nonpartisan analysts found that the deficit would balloon to
$2.75 trillion over the next decade if Bush's policies were enacted,
far worse than the $2.01 trillion the CBO is looking for under
existing policies.
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